If Testing the Operating Effectiveness of Controls Surrounding an Estimate

question 79

Multiple Choice

If testing the operating effectiveness of controls surrounding an estimate alone does not provide sufficient appropriate audit evidence, _______.

• A)the auditors should consider increasing the risk and cost associated with the audit
• B)auditors also conduct tests of internal controls pertaining to the reasonableness of accounting estimates
• C)auditors also conduct substantive procedures on the reasonableness of accounting estimates
• D)the auditors should disregard testing of controls completely, and instead focus on substantive testing

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Definitions:

Fromm's Existential Needs

Refers to the basic needs identified by Erich Fromm that drive human behavior, including relatedness, transcendence, rootedness, a sense of identity, and a frame of orientation.

Erikson's Stages

Refers to Erik Erikson's theory of psychosocial development, which outlines eight stages of human growth, each characterized by a specific conflict and potential outcome.

Completed

The state of having finished or brought something to an end.

Rotter's LOC

A psychological concept developed by Julian B. Rotter, referring to an individual's belief about the underlying causes of events in their lives, denoting either internal or external locus of control.